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Eric Carlson
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Vantage Drilling reopens Asia customs and immigration bribe probe

Image courtesy of Vantage Drilling InternationalA Houston-based drill ship operator said Friday it reopened an investigation into possible bribes in Asia for customs and immigration officials “in light of the allegations in the Petrobras matter.”

Vantage Drilling International said in an SEC filing that it started investigating the Asia allegations in 2010.

It closed the investigation in 2011 and concluded “that no disclosure was warranted.”

But last year, Vantage said an agent it used in Brazil, Hamylton Padilha, entered into a plea deal with Brazilian authorities for his role in handling bribes on behalf of former Petrobras executives.

Petrobras is Brazil’s state-owned oil and gas giant.

Vantage said Friday Padilha also gave evidence “of an alleged bribery scheme between former Petrobras executives and Hsin-Chi Su.

At the time of the alleged Brazil bribery scheme, Su was a member of Vantage Drilling’s board of directors and a significant shareholder of the company.

Vantage self reported Padilha’s plea deal last year to the DOJ and SEC. It also launched an internal investigation.

The company’s Petrobras-related probe “is ongoing and [Vantage is] cooperating with the DOJ and SEC in their investigation of these allegations,” Vantage said Friday.

The company said in light of the Petrobras allegations it also decided to reopen the Asia bribe probe out of “an abundance of caution.”

Vantage Drilling Company trades on the NYSE MKT under the symbol VTGDF.

It emerged from Chapter 11 protection in February. Lenders and noteholders agreed to restructure more than $1.6 billion in debt.

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Here’s the full FCPA disclosure from the Form 10-Q (Quarterly Report) filed with the SEC by Vantage Drilling Corporation on May 13, 2016:

In July 2015, we became aware of media reports that Hamylton Padilha, the Brazilian agent the Company used in the contracting of the Titanium Explorer drillship to Petroleo Brasileiro S.A. (“Petrobras”), had entered into a plea arrangement with the Brazilian authorities in connection with his role in facilitating the payment of bribes to former Petrobras executives.

Among other things, Mr. Padilha provided information to the Brazilian authorities of an alleged bribery scheme between former Petrobras executives and Mr. Hsin-Chi Su, who was, at the time of the alleged bribery scheme, a member of the Board of Directors and a significant shareholder of VDC.

When we learned of Mr. Padilha’s plea agreement and the allegations, we voluntarily contacted the U.S. Department of Justice (“DOJ”) and the SEC to advise them of these recent developments, as well as the fact that we had engaged outside counsel to conduct an internal investigation of the allegations. Our internal investigation is ongoing and we are cooperating with the DOJ and SEC in their investigation of these allegations.

In connection with our cooperation with the DOJ and SEC, we recently advised both agencies that in early 2010, we engaged outside counsel to investigate a report of allegations of improper payments to customs and immigration officials in Asia. That investigation was concluded in 2011, and we determined at that time that no disclosure was warranted; however, in an abundance of caution, we are reviewing the matter again in light of the allegations in the Petrobras matter.

Although we cannot predict the outcome of this matter, if the DOJ or the SEC determine that violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) have occurred, the Company could be subject to civil and criminal sanctions, including monetary penalties, as well as additional requirements or changes to our business practices and compliance programs, any or all of which could have a material adverse effect on our business and financial condition.

Additionally, if we become subject to any judgment, decree, order, governmental penalty or fine, this may constitute an event of default under the terms of our secured debt agreements and result in our outstanding debt becoming immediately due and payable.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016

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